China trade surplus with United States hits record $29bn high

China trade surplus with US widens unexpectedly

Deanna Wagner
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14 July, 2018, 03:59

China's exports rose 11.3% in June from a year earlier, compared with a 12.6% increase in May, customs data showed.

The June figures may have received a boost from U.S. and Chinese traders who rushed to fill orders for soybeans, ball bearings and other goods in both directions before threatened tariff hikes took effect.

The figures come a week after the trade war between the two began, with the USA imposing tariffs on $34bn of Chinese goods, and China retaliating.

"Those talks produced progress, so much so that the USA government said they would put the trade war on hold, but all of a sudden an announcement was made to impose tariffs on imports from China".

As the world's largest exporter, China has threatened retaliatory action against the tariffs and pledged that it would lodge a complaint with the World Trade Organization. So far China has responded in kind, adding tariffs to $34bn of goods from the U.S. and threatening "firm and forceful measures" to match the threat of tariffs on $200bn worth of United States exports. Its trade surplus with the United States over the same period was $133.76bn, up from $117.51bn past year.

The commerce ministry also said this week it will use funds collected from tariffs charged on imports from the U.S. to help ease the impact of United States trade actions on Chinese companies and their employees.

But comments from China's commerce ministry indicated that June's figures are a blip, a result of Chinese companies pushing to get products out the door before the tariffs went into effect, according to Reuters. The trade surplus was 261.88 billion yuan last month, official data showed.

David Kuo, chief executive of the Motley Fool Singapore, said "US tariffs will increase the cost of Chinese imports but they are unlikely to deter United States consumers entirely".

After a strong start to the year, growth in China's exports has moderated recently, and is expected to face more pressure from the initial round of US tariffs.

This added to brewing tensions between the economic superpowers as they stand on the brink of an all-out trade war that Beijing warned would have a "negative impact" globally.

In a sign Beijing is seeking alternative supplies of the commodities as it hit USA imports with extra tariffs, China had dropped import tariffs on a range of animal feed ingredients from several Asian countries.